Federal Reports

The three regional procurement offices (RPO) of the Veterans Health Administration (VHA) procure supplies and services to support the medical facilities within their regions: Central, East, and West. In fiscal year 2021, RPO West obligated about $2.7 billion in contracts. The VA Office of Inspector General (OIG) reviewed whether RPO West contracting officials administered contracts and accepted supplies and services in accordance with federal and VA regulations. To protect veterans and taxpayer dollars, contracting officials must maintain the necessary evidence to demonstrate compliance with contract terms and conditions.The review team examined files for a random sample of 49 contracts, valued at over $100,000 each, awarded from January 1 through June 30, 2020, and 93 invoices associated with these contracts. The OIG found RPO West contracting officers and contracting officers’ representatives did not always maintain documentation to demonstrate proper acceptance of supplies and services. The team determined several factors contributed to noncompliance, including officials not understanding their responsibilities, heavy workload, ineffective oversight, and prioritization of awarding contracts.RPO West contracting officials’ noncompliance with developing and maintaining required documentation resulted in $12.8 million in questioned cost. Until VHA improves oversight of contracting officials and ensures their compliance with federal regulations, it lacks assurance that veterans are receiving critical supplies and services.The OIG made eight recommendations to RPO West’s executive director, including establishing controls to ensure electronic files are created for all contracts requiring a representative, delegation memorandums are completed when required, and representatives upload required acceptance documentation. The executive director should also assess existing contracts for compliance and correct as needed. In addition, branch chiefs should consistently monitor contract administration documentation, and create a quality assurance process that ensures requirements are met.

What We Looked AtTo help combat highway fatalities, the Fixing America’s Surface Transportation Act (FAST Act) of 2015 authorized over $2.7 billion in highway safety grant funds for fiscal years 2016 through 2020. The National Highway Traffic Safety Administration (NHTSA) awarded these safety grants to States, which distributed them to a network of sub-grantees, then monitored the funds’ use for each State Highway Safety Office. Due to the significant amount of grant funding authorized by the FAST Act and the importance of NHTSA’s oversight, we initiated this audit as a follow up to our 2014 recommendations to help the Agency improve oversight controls for safety grants. Specifically, we reviewed NHTSA’s actions to improve controls over (1) mitigation of deficiencies identified by the Agency’s triennial management reviews of States, (2) monitoring States’ compliance with Federal grant requirements, (3) States’ timeliness in expending grant funds, and (4) developing and implementing an electronic database to identify and monitor recurrent or systemic grant oversight findings. What We FoundNHTSA implemented our 2014 recommendations to improve the Agency’s oversight of highway safety grants. Specifically, NHTSA worked with States to mitigate deficiencies and revised its grant oversight policies and procedures to require documentation of States’ corrective actions and management approval for closing actions. The Agency also implemented updated monitoring procedures and a risk assessment process for improving States’ compliance with Federal grant requirements and for monitoring the timeliness of States’ expenditure of highway safety grant funds. Finally, NHTSA is evaluating options to replace its grant information system. RecommendationsWe made no recommendations.

For our final report on our audit of the United States Patent and Trademark Office’s (USPTO’s) patent legacy systems, our audit objective was to review USPTO’s progress towards retiring its patent legacy systems. Specifically, we assessed USPTO’s (1) cost, schedule, and capabilities of select patent legacy systems and (2) ongoing activities to transition from the legacy systems to next-generation systems. We found the following: I. USPTO’s cost estimating and scheduling processes are not comprehensive and II. USPTO needs to improve Agile adoption practices when developing next-generation patent systems.

What We Looked AtThe Federal Highway Administration (FHWA) oversees about $52 billion in Federal-aid Highway Program funds for fiscal year 2022. The Agency makes these funds available to State Departments of Transportation for highway and infrastructure projects. Modifications to a project’s contract specifications are frequently done through change orders, which are an important component of the Federal-aid Highway Program since they can affect projects’ cost, schedule, design details or specification requirements, or a combination of these key elements. Given the possible risks to program oversight posed by change orders, we initiated this audit to assess FHWA’s oversight of contract change orders. What We FoundWe found data limitations that could impact FHWA’s ability to monitor and oversee change orders. Furthermore, FHWA’s methodology for its compliance assessment program (CAP) reviews can lessen the reviews’ usefulness for oversight and monitoring of change orders. The Agency also lacks a consistent definition of change order as well as clear guidance on what constitutes a major change. Lastly, FHWA’s policy and guidance on change orders in its Contract Administration Core Curriculum (CACC) Manual are outdated, and its guidance for monitoring and tracking its change order reports and associated findings lacks clarity. RecommendationsWe made recommendations to help FHWA strengthen its oversight role and help to mitigate potential exposure to risks related to change orders. FHWA concurred with four recommendations and partially concurred with the other two. We consider all six recommendations resolved but open pending completion of planned actions.

As SBA shifts from reviewing applications to servicing COVID-19 Economic Injury Disaster Loans (EIDL) and Targeted EIDL Advances, the potential for identifying additional fraudulent loans increases significantly as borrowers default. The ability to recover funds and prosecute fraud relies on having continued access to loan and grant data, especially regarding evidential matter for audits and investigations.In February 2022, OIG found that SBA had been migrating data from its software provider without a data migration plan. This software service provider is an outside company contracted to provide cloud-based software solutions. Without advance planning for data migration and defined acceptance criteria, SBA took reactive measures to prevent the loss of vital program data when the contract ended on June 30, 2022.To address concerns about data migration challenges for SBA’s COVID-19 EIDL pandemic relief program, we suggest the SBA design and implement a comprehensive migration plan for the COVID-19 EIDL program, to include defined acceptance criteria and robust testing, with detailed project milestones and defined areas of responsibility for program management, information technology, and procurement groups so that data is preserved to meet the needs of all stakeholders.SBA managers stated they were working to modify the software service provider contract to ensure data will remain available for future litigation efforts. Management’s plan to modify the contract would ensure data is preserved. Once the contract modification is complete, the risk of data loss will be mitigated. Safeguarding the data from destruction beyond the June 30, 2022 contract expiration will allow SBA to support legal proceedings for the immediate future.